Today is July 17, 2020. 200 years ago, on July 17, 1820, Jeb Springfield established a (RDFund) for his town, with these rules: Rule 1. Money withdrawn from the RDF can be spent for anything the town wants. Rule 2. A withdrawal of money from the RDF is permitted only once every 100years. Here is the RDF’s history July 17, 1820 Jeb Springfield contributes $2 to establish the RDF. July 17, 1821 Inspired by Jeb’s gift, the citizens (as a group) make the first of 100 annual $1 contributions. July 17, 1920 The citizens make their final $1 contribution; no more money is ever contributed to the RDF. July 17, 1920 They withdraw 90% of the RDF’s money and use it to create Springfield College. July 17, 2020 The town is considering withdrawal from the RDF. Assume the RDF earns a return of 12% (EAY) on its money. answer questions: (A) On July 17, 1920, before the withdrawal (after final $1 contribution), how much money in the RDF? (B) Springfield College used half of the RDF withdrawal on July 17, 1920 for construction, and it used the other half to buy a growing annuity with 200 annual payments, with the first one on July 17, 1920 and growing at a rate 8% (EAY) thereafter. How much was College’s first annuity payment? (C) How much is the College’s annuity payment in July 17, 2020? (D) How much money is in the RDF in July 17, 2020? (E) Suppose the town withdraws 90% of this money that is left and divides it into equal portions for each of the 80,000 residents How much does each resident receive?
Today is July 17, 2020.
200 years ago, on July 17, 1820, Jeb Springfield established a (RDFund) for his town, with these rules:
Rule 1. Money withdrawn from the RDF can be spent for anything the town wants.
Rule 2. A withdrawal of money from the RDF is permitted only once every 100years.
Here is the RDF’s history
July 17, 1820 Jeb Springfield contributes $2 to establish the RDF.
July 17, 1821 Inspired by Jeb’s gift, the citizens (as a group) make the first of 100 annual $1 contributions.
July 17, 1920 The citizens make their final $1 contribution; no more money is ever contributed to the RDF.
July 17, 1920 They withdraw 90% of the RDF’s money and use it to create Springfield College.
July 17, 2020 The town is considering withdrawal from the RDF.
Assume the RDF earns a return of 12% (EAY) on its money.
answer questions:
(A) On July 17, 1920, before the withdrawal (after final $1 contribution), how much money in the RDF?
(B) Springfield College used half of the RDF withdrawal on July 17, 1920 for construction, and it used the other half to buy a growing
(C) How much is the College’s annuity payment in July 17, 2020?
(D) How much money is in the RDF in July 17, 2020?
(E) Suppose the town withdraws 90% of this money that is left and divides it into equal portions for each of the 80,000 residents How much does each resident receive?
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